chapter 7 markets Flashcards
what is a stock exchange?
a place where financial instruments can be purchased or sold
what does IPO stand for?
initial public offerings
what are the three reasons for companies becoming listed?
- raising money by selling shares, and
- increasing the public profile and awareness of the company
- it is much easier to buy or sell their shares after the IPO because the shares become more liquid
which stock market index relates to which country?
- DAX = Germany
- FTSE 100 = US
- Hang Seng = Hong Kong/China
- Nikkei 225 = Japan
- Dow Jones Industrial Average = US
- S&P 500 = US
what is normally used to ascertain whether share prices generally are moving up, down or sideways?
stock market indices
are all companies able to trade their shares in a stock exchange?
no, companies have to be accepted for trading on an exchange and become what is known as listed companies
what are the general requirements for companies to become listed?
companies generally need to be well established and large enough to attract sufficient trading in their shares
what is the closing price?
the price of a security, such as a share or a bond, at the end of the day
what is the most well known stock exchange index?
Dow Jones Industrial Average (DJIA)
what is an index?
a statistical measure of the changes in a selection of stocks representing a portion of the overall market
what does it mean if the index has increased or decreased?
- if the index has increased, then prices in general have increased
- if the index has decreased, then prices in general have decreased
what are single market indices?
indices drawn from shares listed on just one stock exchange
what are global market indices?
indices drawn from shares listed on various exchanges internationally
what is a portfolio?
a selection of investments
what is a stock market index?
- a number that amalgamates a group of share prices weighted by the size of the firm
- so the price movements of larger firms have a bigger effect on the overall index
